According to FINRA, Susquehanna Financial Group, LLLP was censured and fined $100,000 for inaccurately reporting transactions in TRACE-eligible securities without the required No Remuneration (NR) indicator.

The reporting failures occurred during the firm's transition to a new TRACE reporting system. Due to an error in that transition, the firm failed to include the NR indicator in TRACE reports for transactions executed without a mark-up, mark-down, or commission. The firm remediated the error only after FINRA brought it to the firm's attention.

Beyond the reporting errors themselves, FINRA found that the firm failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with FINRA Rule 6730(d). The firm had no supervisory system or procedures to oversee the use of the NR indicator when reporting trades to TRACE. The firm simply did not perform any review of its use of the NR indicator in its TRACE reports.

The NR indicator serves an important function in the fixed income markets. It identifies transactions where the reporting firm did not receive compensation, which provides valuable information about the nature of trades and helps ensure market transparency. When this indicator is missing or inaccurate, it can distort the market data that investors and regulators rely upon.

Following the FINRA action, Susquehanna amended its written supervisory procedures to require a supervisory review for the accuracy of the NR indicator when reporting trades to TRACE. The firm also retroactively performed this review.

This case illustrates the importance of proper testing and oversight when firms implement new reporting systems. System transitions are high-risk periods for compliance failures, and firms should have procedures in place to verify that new systems are functioning correctly. For investors, accurate TRACE reporting contributes to fair and transparent fixed income markets.